He adds: "The primary elements of the cost case are people, software licences, power and space. Think about software licenses: many pieces of software are licensed on a per-processor basis and running that software on 4,000 servers means over 4,000 licences. If I can run it on 30 instead, the licence saving could be dramatic. People savings are more variable but we have found that, with distributed servers, the number of people involved grows linearly. So, if I have 2,000 servers and 200 people, with 4,000 servers there are 400 people. With mainframes it doesn't work that way: capacity can be grown dramatically without increasing the number of people who support it."

It will not all be cost savings for IBM because applications have to be moved. In some cases, these will have to be migrated from Windows or Unix onto Linux and, even though it is now a well understood migration path, it will still incur costs.

Return on investment

HP is not so open about its return on investment.

"Before we started the program our ROI was not good," Dodsworth says. "[We were spending four or five per cent] of sales revenue [on IT]. The program does require us to spend and it's obviously quite a heavy expenditure associated with building the datacenters and implementing all of this new technology but, at the end of the program, we will have IT that will cost approximately two per cent of our sales revenue.

"So there's a huge cost benefit that will be delivered through the change in the infrastructure, the reduction in energy consumption, streamlining our IT workforce by removing contingent work, and moving to a staff-based model."

One of the principal cost returns will come from reduction in power draw.

Quocirca's Szubert says: "Power consumption is becoming one of the biggest components in the cost of computing. The predictions are that it is approaching and will exceed the cost of hardware [over the lifetime of the server]. So you've got to start factoring it in soon. The airline industry is getting panned for its carbon footprint but the IT industry causes just as much pollution. The IT industry is getting a pretty easy ride but I think that's going to change with the increasing demands for computing."

The power issue is becoming critical with datacenters being moved to areas like Oregon where hydroelectric power offers cheaper, eco-friendlier electricity. In other areas, electricity suppliers are capping the amount of power that a company can draw for data processing. Consolidation through virtualization can make a dramatic average reduction of 50 per cent in power usage.

Consolidation has a lot going for it so it is no wonder that 67 per cent of Quocirca's respondents say they are consolidating systems and a further 17 per cent are considering it.